Will Resolute make a comeback?
Mike Yamamoto | email@example.com
optionMONSTER's Heat Seeker system detected the purchase of 4,000 September 7.50 calls for the ask price of $0.75 and the sale of 4,000 September 12.50 calls for the bid price of $0.05 yesterday. The volume dwarfed the previous open interest of 56 and 193 contracts respectively at the two strikes, indicating that this is new positioning.
This bullish vertical spread cost $0.70 to open, which is the maximum potential loss if REN remains below $7.50 through expiration in mid-September. The maximum gain of $4.30 would be realized with the stock at or above $12.50 at that time.
The trade follows put selling identified by our scanners on March 17. (See our Education section)
REN gained 2.71 percent yesterday to close at $7.20. The oil and gas driller ran up to $9.65 going into its March 10 earnings report but plunged after announcing the results and hit an all-time low of $6.45 the following week.
Yesterday's call spread pushed total option volume in Resolute to 9,755 contracts, more than 8 times its daily average for the last month. Only 33 puts changed hands in the session.